Essential financial planning steps for millennials in India

Financial planning for millennials in India



Frequent life transitions necessitate financial planning for millennials. Millennials tend to rely heavily on debt, engage frequently in expensive money management, and display low levels of financial literacy.

Currently, the millennials generation has an increasing wealth gap which means they have to start off with less income. So they are more concerned about the present and are struggling to establish a budget to help with other financial goals. It is no surprise that millennials are struggling to build emergency savings and are instead living a paycheck-to-paycheck kind of life.

Millennials never quite healed from the great recession, and the economic prosperity of their elders has largely been out of reach. Millennials have been scarred by a flailing job market following the 2008 financial crisis and laden with record amounts of student debts as well.

Now, they face a new challenge: a global pandemic that’s upending the economy.

Creating financial goals


Creating financial goals is the most important part of financial planning for millennials. Setting a goal makes you work for it in a very planned manner and achieve it on time.

Like any journey, the road to financial success needs a destination. The first step is to define financial goals that support your personal ambitions and life objectives.

1.Build an emergency fund:


Financial emergencies can happen to the best of us. That’s why you need a healthy amount of money in a savings account – to cover three to six months of the bill. If you are nowhere close, make building an emergency fund on a priority

Various ways to achieve your emergency fund can be;

  1. Cut back on spending from month to month to free up cash to put in the bank.
  2. Get a second job to boost your income.

2. Eliminate unhealthy debt:


Not all debt is created equal. Paying off a mortgage or auto loan over time can help you build credit. Also, credit card debt is unhealthy and costs you a lot in interest and you should aim to get rid of it.

Once you have built your emergency fund, use your extra savings to chip away at the balances you owe, paying them off in order of highest to lowest.

3. Start Investing


Investing during your 20s or 30s could set you up to become a millionaire by your 60s. That may seem impossible but it’s true and this owes to the power of compounding.

The moves you make as a millennial could position you to really enjoy your 40s, 50s, and beyond.

Developing other streams of incomes


It’s hard to rely on a 9-5 job for your entire livelihood with layoffs and pay cuts always around the corner. With multiple streams of

income, you can avoid putting all your eggs in one basket and use several streams to grow rich.

Some strategies for a brighter financial future and to build several income streams:

  1. Diversify your investments– As an investor, you should always seek to diversify your portfolio in various ways:
    Open a brokerage account and invest in ETFs or mutual funds.
  2. Offer a service or sell something – By offering a service or selling something, you can create a small side business. If you sell something through a third-party company to diversify your income you may be able to build a passive income that builds slowly over the years.
  3. Create a product – If you are creative and savvy, you can dream up some new product and promote it. Think outside the box until you come up with a new idea that fills a need.
    Digital products are also huge these days. If you have a specific skill you want to teach others, setting up a web-based course through a website is a good way to get started.
  4. Start a passion project – This is exploring what you are passionate to do and you feel totally immersed in doing this particular activity. Once you start putting energy into your passion you might develop it as an alternate side job.
  5. Create Youtube videos – During these pandemic times, many of us have got ample time and thus have tried hands-on building our own You tube channel. You can create videos in just about any area that you like to and then put them on You tube.
  6. Start a blog – “Content is king” said Bill Gates over 20 years ago and this maxim still remains true to this today.
    To get started, your primary investment is your time granted, time isn’t a  small investment but it’s definitely worth it.

Goal-based treatment strategies


Goal-based investing allows you to work towards achieving a goal rather than chasing returns. It can breathe new life to an otherwise haphazard savings and investment plan. If you can master goal-based investing, you can become your own financial planner.

The primary objective of a goal-based investment plan is to meet personal, lifestyle, and family goals with a long-term investment strategy. The goal may be purchasing a house, a foreign destination tour, children’s education or marriage, building a retirement corpus.

Goal-based investing is a step by step process. Here are a few basics to get you started.

Step 1: Identify and quantify your goals.

Start by identifying your financial goals and the timeframe available to reach that goal. If you have more than a single goal, divide them into separate buckets of short-term, medium-term, and long-term. Then talk to a financial advisor to research the capital you require to reach that goal.

Step 2: Calculate how much you can save and invest.

Once you have quantified your goals and figured out the investment horizon, it’s time to calculate how much you can save from your income to invest. If the monthly outflow for the investment is higher than what you can save you may have to cut down on nonessential expenses.

Step 3: Choose your investment instrument.

When you speak of goal-based investing it’s not always about the long-term. You might have short-term needs and goals as well.


Revaluating financial Planning vs Action


Changing your financial plan too often will be as bad as not having a financial plan at all. Then again, there is no ideal fixed period after which reviewing a plan can be recommended.

It is up to you to decide on how often to review the plan – every six months or every 2 years or every 5 years.

The factors that will guide you regarding how often you should  review your plan are:

  • Financial products – The type of financial products that you have invested in. If there are products that are maturing at short intervals, you may have to review your plan more often.
  • Goals – The types of goals that you have set. If you have many short-term goals, as each goal is achieved, you need to review your financial plan.
  • Personal factors – If the number of your dependents increases or decreases, you need to review your plan. If your income increases or decreases, you need to review your plan…..and so on.

Revaluating your financial planning involves


  • Deciding if all the goals that you have set are still relevant or would you like to add some fresh goals?
  • Deciding if the time frames that you have set for the goals are still the same as you had previously decided or are going to be different now.
  • Are the financial instruments that you choose to meet your goals going as per the plan? This is more the case for investments that are unpredictable like shares or equity mutual funds.

Actions for your financial planning


The whole idea of revaluating your financial planings is to reconstruct it, if necessary. If you are not comfortable with your financial situation after revaluating and you feel your financial plan is not taking you closer towards your goals….you need to modify it. Modifying the plan involves:

  • Deleting the goals that you have already achieved or do not wish to achieve anymore from your plan. It also involves adding fresh goals to it.
  • Charging the time frames that you set for the goals, if necessary. For example, If your child is planning to get married next year instead of 4 years from now, you will have to rearrange your finances to arrange for the amount that you had originally planned to spend on the wedding.
  • Investing and disinvesting in financial instruments if necessary.




  • Millennials are struggling to build emergency savings and are instead living a paycheck-to-paycheck kind of life, which they need to stop doing right away.
  • Millennials need to follow a goal-based investing approach to achieve their financial goal. To have a brighter financial future they need to think of building several income streams.
  • Once you develop a financial plan for yourself, it might need revaluation from time-to-time and you can modify your plan if you feel it is not taking you closer towards your goal.

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